US Dollar and global economic uncertainty are both up

February 06, 2017 – US Dollar is the strongest currency after Japanese Yen in today’s foreign currency market. The political and economic uncertainty in USA is very high. President Donald Trump is making new enemies every day. He recently initiated an attack on a Federal Judge on whose order the Trump’s immigration order was put on hold. Trump said in a statement that if there is any attack on US soil, then Americans should hold this judge responsible. Trump’s brawl with the judiciary isn’t going to be pretty. The US government wants to put a ban on immigrants and people from certain countries, but that ban was lifted after a court decided to halt this ban. In the midst of all this political uncertainty, US Dollar has managed to stay strong. As I am writing this article, the top two currencies in the market are USD and JPY.

Investors are also trying to find clarity in what the Feds policy will be in future. Actually, the Federal Reserve itself might not know what their policy is going to be :) as they are waiting to see what Trump administration plans to do next. Last week, Trump made few comments about how other countries are taking advantage of their weak currencies. He obviously was talking about Japan, China, and other countries that are major exporters. Weak currency helps exporters to make more profits. Trump said that everybody is doing this [i.e. other countries are weakening their currencies] except for United States of America. So what does this tell us?

If trump’s administration adapt the policy of interfering in the currency market to weaken US Dollar, then that can have some serious consequences. Just few months ago, we saw how British Pound went from 1.50000 to below 1.20000 [against USD] in a matter of few days. The same can happen to USD if Trump officially announces the “Weak-Dollar-Is-Good” policy. Traders are hoping to see Federal Reserve hike interest rate two or three times this year. Now, under the new Trump Administration, can Feds still deliver what they had promised?

USA is not the only place where political and economic uncertainty is at large. 2017 is a very crucial year for Europe, especially for European Union. General elections in Germany, France, and some other countries are due this year. Some experts fear that the far-right political parties might win the elections amid the growing support of nationalism and hate towards current immigration policies of EU. Some of the party leaders are already talking about leaving EU…